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October 25, 2020 (MLN): The highlight of the departed week was the FATF’s decision to retain Pakistan in its Grey list till February 2020 to give it a time to repair the shortcomings as Pakistan has made progress across all action plan items and has now “largely addressed”21 of the 27 action items.

Apart from this, the other important economic and business events that took place during the last week are in order so as to become acquainted with the recent developments in Pakistan’s economic and public policy.

Events of Importance through the Week:

The World Bank on Friday approved $304 million in financing for Punjab Resource Improvement and Digital Effectiveness Program (PRIDE). The program supports efficiencies in public resource management that generate savings and create fiscal space for growth-generating investments in the Punjab province.

On Thursday, Adviser on Finance Dr. Abdul Hafeez Shaikh said that despite fiscal constraints, after the pandemic, the government has devised a strategy to provide relief to people and businesses by direct cash transfers.

Besides, the International Labour Organization (ILO) in its new research report said that the coronavirus crisis hit the garment sector in the Asia-Pacific region hard, with plummeting retail sales in key export markets affecting workers and enterprises throughout supply chains.

On Wednesday, the Economic Coordination Committee (ECC) of the Cabinet decided to continue supply of RLNG to Agritech and Fatima Fertilizer till November.

Furthermore, Novartis, a Swiss MNC with a multi-decade presence in Pakistan, acquired a manufacturing facility to produce medicines locally. Novartis has an expansion plan that will bring an investment of about USD 20 million.

On Monday, ECC formed committee to evaluate the proposal for increase in Minimum Support Price of wheat.

Announcements

On the equity front, Avanceon Automation and Control W.L.L., a subsidiary of Avanceon Limited in Qatar,  via notification to exchange informed that it has been contracted to provide an Intelligent Transport System for the Public Works Authority Ashghal in Lusail City.

Mari Petroleum approved submission of EOI to acquire majority shares in Two Wind Power Projects.

TPL Insurance approved an equity investment of up to 19.9% by Deutsche Investitions – und Entwicklungsgesellschaft mbH (DEG), a wholly owned subsidiary of KfW Group based in Cologne, Germany.

The general public subscription of Agha Steel Industries Limited’s 30 million shares i.e. 25% of the total offer size oversubscribed by 1.28x or by 8,322,500 ordinary shares amounting to PKR 266,320,000.

Treet Corporation Ltd decided to exit the education sector, in this regard, the Company has signed a Memorandum of Understanding (MOU) with an interested party on October 20, 2020 for, inter alia, sale of 100 % shares of its subsidiary Global Arts Limited and transfer of control thereof.

The Board of Directors of Meezan Bank Limited approved to initiate “Meezan Bank Employees Share Option Scheme” for employees of the Bank, subject to all regulatory approvals including Securities and Exchange Commission of Pakistan, shareholders' approval through special resolution etc.

The Board of Directors of the Sitara Chemical Industries Limited, in its meeting held on October 20, 2020, approved the expansion of its existing Coal-Fired Power Plant by a further 40MW to meet its existing and future requirements.

Hascol Petroleum Limited (HASCOL) decided to challenge the Order passed by the Oil and Gas Regulatory Authority (OGRA)  in respect of suspension of the marketing license of the Company for Khyber Pakhtunkhwa with immediate effect and imposition of penalty of Rs. 10 million.

Hub Power Company Limited (HUBCO) clarified that the decision to issue Sukuks worth PKR 6 billion is in the discussions stage with no agreement executed as yet.

Topline Securities submitted PAI on client’s behalf to acquire more than 51% of issued and paid up capital of Mian Textile Ltd.

Financial Results:

Apart from this, several listed companies announced their financial results last week amid ongoing earnings season. Some of the important ones are as follows:

Aisha Steel Mills posted net profits of Rs 660 mln in 1QFY21, against the net loss of Rs 203.9 million incurred in the same quarter last year.

Attock Cement enjoyed a growth of 64% YoY in earnings during 1QFY21.

Bank Alfalah registered 9% YoY fall in profits during 9MCY20 to Rs 8.66 billion (EPS: Rs 4.87).

Pakistan Oilfields Limited profitability declined merely by 4.7% YoY during 1QFY21 to Rs 3.7 billion.

Packages Ltd witnessed a 29% fall in earnings during 9MCY20 to Rs. 1 billion (EPS: 11.27).

Attock Petroleum Limited witnessed a 21% YoY increase in net profits for 1QFY21 ended on September 30^th, 2020, to Rs 1.485 billion against the net profits of Rs 1.225 billion reported in the same period last year.

Attock Refinery suffered loss of Rs 555 million from refinery operations during 1QFY21.

Fauji Foods incurred losses of PKR 2.4 billion in 9MCY20 i.e. around 27% lower than the losses witnessed in the same period of last year.

LOTCHEM’s profitability nosedived by 78% YoY during 9MCY20 to Rs 1.037 billion (EPS: Rs 0.69).

National Refinery Limited continued to suffer financial losses owing to lower revenue as it incurred losses of Rs. 1.31 billion (LPS: 16.4) during the quarter ended September 30, 2020, i.e. nearly 93% higher as compared to the losses made in the same period of last year.

International Steel Ltd’s profits grew by 61% YoY in 1QFY21 to Rs 559 million (EPS: Rs 1.29) against net profits of Rs 347 million (EPS: Rs 0.80) of the same period last year.

Mari Petroleum recorded a growth of 21% YoY in earnings during 1QFY21 to Rs. 9.06 billion (EPS: 67.96).

EPQL’s profitability remained lower owing to completion of debt servicing period as it posted 22.2% YoY decline in net profits during 9MCY20 to Rs 2 million from Rs 2.6 million in 9MCY19.

DGKC reported a massive 80% decline in net losses to Rs 293 million (LPS: Rs 0.67) in 1QFY21.

Nishat Power’s revenue plummeted by 17% owing to lower furnace oil prices.

PPL’s profitability stayed flat at Rs 14.32 billion during 1QFY21.

Habib Metro Bank saw a 65% rise in earnings owing to higher NII with EPS stood at Rs. 7.94.

International Industries Ltd successfully converted losses into earnings during 1QFY21 by reporting profits of Rs. 612.4 million (2.8) during the period, as compared to the losses of Rs. 56.6 million (LPS: 1.87).

Maple Leaf Cement Factory (MLCF) posted net profits of Rs 555 million for 1QFY21 against the net loss of Rs 982.3 million reported in the same quarter last year.

Engro Fertilizers Limited (EFERT) reported 9% YoY increase in net profits to Rs 11.49 billion for the nine months period ended on September 2020, compared to the profits of Rs 10.5 billion earned in the corresponding period last year.

Bank Al Habib Limited (BAHL) reported earnings of Rs. 13.2 billion (EPS: 11.91) for the nine months ended September 30, 2020, i.e. around 89% higher than the figures recorded in the same period last year.

Allied Bank Limited (ABL)’s net income for the nine months period ended on September 2020 clocked in at Rs 12.6 billion compared to the earnings of Rs 9.6 billion reported in the corresponding period last year.

Askari Bank’s profits rose by 87% in 9MCY20 despite higher taxes and provisions.

EFU General Insurance Limited (EFUG) has posted its profit after tax of Rs 2.22 billion (EPS: Rs 8.16) for the nine months ended September 30, 2020, showing a robust growth of 78.5% YoY.

Faysal Bank reported 25% YoY growth in profitability owing to higher NII and capital gains.

Engro Corporation Limited (ENGRO) posted consolidated net profits of Rs 31 million for the period of 9MCY20 which was 43% higher than the profits of Rs 21.7 million reported in the corresponding period last year.

Cherat Cement witnessed turnround in bottom-line from net loss of Rs 338.5 million in 1QFY20 to net profits of Rs 309 million in 1QFY21.

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October 25, 2020 (MLN): The financial snapshot of the country is brought to light with the economic and financial data releases over the course of the week.

• The Weekly Sensitive Price Indicator (SPI) for the Combined Group decreased by 0.23% during the week ended Oct 22, 2020 while the SPI increased by 8.76% compared to the corresponding period from last year.

• Pakistan remained on the grey list of the Financial Action Task Force (FATF) as it has been unable to comply with 6 of the 27 points in the global watchdog’s action plan, says President FATF, Dr. Marcus Pleyer, while addressing a press conference at Paris on Friday.

• The gross sale of securities by overseas investors during the week ended October 16, 2020 was recorded at Rs.9.6 billion, which is only 3.6 percent higher than the figures recorded last week.

• Pakistan's Forex Reserves increased by USD 286.10 Million or 1.5% and the total liquid foreign reserves held by the country stood at USD 19,301.60 Million on Oct 16, 2020.

• The non-government sector has borrowed a net sum of Rs.18.31 billion during the week ended October 16, 2020, which brings the cumulative net retirement for the ongoing fiscal year FY2021 to Rs.122.85 billion. The net retirement as of the prior week was recorded at Rs.141.15 billion.

• The government of Pakistan has retired Rs.187.48 billion during the week ended October 16, 2020, which brings its total net borrowing for the ongoing fiscal year 2021 to Rs.72.04 billion. As of the prior week, the government had borrowed a net sum of Rs.259.52 billion.

• Economic Coordination Committee (ECC) decided that the supply of RLNG shall continue to Agritech and Fatima Fertilizer for the Rabi Season 2020-21 till the end of November 2020.

• The World Bank’s Board of Executive Directors approved $304 million in financing for Punjab Resource Improvement and Digital Effectiveness Program (PRIDE). The program supports efficiencies in public resource management that generate savings and create fiscal space for growth-generating investments in the Punjab province.

• Pakistan’s Current Account was in surplus of $73 mn during Sept, bringing surplus for 1QFY21 to $792 million compared to a deficit of $1,492 million during the same time last year.

• Pakistan’s trade deficit in services stood at $77 million during the month of September, signifying an increase of 6% as compared to the previous month and 20% as compared to the same period of last year.

• The imports of vehicles from foreign countries increased by 43% MoM to USD 152 million during the month of September 2020, compared to USD 106 million in August 2020, revealed trade figures released recently by the Pakistan Bureau of Statistics (PBS).

• The exports of Chemical and Pharmaceutical Products witnessed an increase of 26.46% MoM and 4% YoY to value at USD 82.98 million during the month of September 2020.

• Pakistan's outstanding debts as of September 30, 2020 stand at a heaping sum of Rs.23 trillion whereas total debt at the end of prior month was Rs.22.67 trillion, meaning that around Rs.332.42 billion were additionally borrowed during this month alone.

• The total exports from Pakistan during the month of September 2020 amounted to Rs. 313.3 billion, showing an increase of 17.97% as against Rs. 265.6 billion in August 2020 and of 13.64% against Rs. 275.7 billion in September 2019.

• The overall imports into Pakistan during the month of September 2020 amounted to Rs. 716.7 billion, showing an increase of 28.89% against Rs. 556 billion in August 2020 and 21.86% as compared to Rs. 588.1 billion in September 2019.

• Pakistan’s trade deficit during 1QFY21 drastically increased by 2.6% YoY to USD 5.84 billion as exports depicted a meagre decline of 65 bps to USD 5.47 billion compared to 1QFY20, whereas, imports during the period increased by 1% YoY to USD 11.3 billion compared to the same quarter last year, shows recently published PBS data.

• China emerged as the largest direct foreign investor in Pakistan during September 2020, with a net direct investment of $97 million, followed by the Hongkong and Malta who invested $22.8 million and $18.5 million respectively, according to SBP data issued.

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October 25, 2020 (MLN): The KSE-100 index gained around 1,101 points during the departed week and closed at 41,266-mark i.e. nearly 2.74% percent higher than the closing of the previous week.

Despite the not-so-fruitful outcome from the meeting with the FATF, the week began as well as ended on a positive note on account of improving external situation and PKR stability, which smoothened cost pressures for import reliant sectors, AKD Securities said in its weekly analysis.

Moreover, the earnings outperformance for the latest reported period for Banks and Fertilizers, where resumption of payouts for Banks was a notable catalyst, added to the positive sentiments. Other developments during the week included the current account surplus of US $73 million posted by Pakistan for the month of September.

Furthermore, the ECC approved supply of RLNG till the end of November 2020, ensuring the supply of RLNG to fulfill the requirements of two fertilizer plants namely Agritech and Fatima Fertilizer, the report added.

Cement, Commercial Banks, Fertilizer and Automobile Assembler emerged as the best performing sectors during the week, as they contributed around 251, 241, 229, and 74 points respectively to the benchmark index.

Company-wise, the scrips of ENGRO, BAHL, LUCK, EFERT, and MEBL emerged as the top performers as they brought in 143, 129, 66, 61 and 58 points respectively.

During the week, 77 companies traded in green while 22 landed in the red zone. The All Share Market Cap increased by nearly USD 1.23 billion, i.e. 2.82% higher than the previous week.

Figures released by NCCPL showed that foreign investors sold USD 6.87 million worth of stocks during the week with foreign corporates doing the bulk of selling @ USD 9.61 million.

On the local front, Mutual Funds purchased USD 7.61 million worth of stocks, followed by USD 4.7 million worth of stocks bought by companies. Other significant transactions included USD 7.7 million worth of stocks sold by Banks/DFIs.

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October 24, 2020: Financial Action Task Force (FATF) has acknowledged that Pakistan has made progress across all action plan items and has now “largely addressed”21 of the 27 action items.

According to Foreign Office, the FATF reviewed Pakistan’s progress on FATF action plan in its Plenary meeting today.

The plenary meeting decided to maintain status quo with respect to classification of Pakistan, for the time being.

The FATF has taken note of the significant progress made by Pakistan on a number of action plan items. Recognizing Pakistan’s sustained and irreversible efforts on implementation of FATF Action Plan, the FATF has upgraded overall 9 Action Plan items in its October 2020 Plenary. There is no item remaining in the incomplete” category. It is pertinent to mention here, prior to this plenary, Pakistan had addressed 14 out of 27 items and now FATF reviewed compliance of remaining 13 Action Plan Items during current plenary.

The action plan items that have been addressed by Pakistan include highly important areas of Financial Sector, illegal Hawala/Hundi, cross-border currency regime, international cooperation in terrorist financing cases, amendments to the Anti-Terrorism Act, implementation of targeted financial sanctions by financial institutions, applying sanctions for AML/CFT violations, and controlling facilities and services owned or controlled by designated persons and entities. This is indicative of the confidence of FATF on the efforts of Pakistani Government.

Pakistan shall continue to make efforts to complete the remaining items in line with its strategy by February 2021. FATF will undertake the next review of Pakistan’s Progress in February 2021.

The Plenary meetings of FATF were held virtually from 18-23 of this month, where its members discussed a variety of topics including Pakistan’s progress.

The Pakistan team led by Minister of Industries and Production Muhammad Hammad Azhar, attended these virtual meetings. Pakistan presented its case in an effective manner and also reaffirmed its political commitment to continue with the efforts to complete the Action Plan.

Radio Pakistan